Council votes to tax Lake Austin homes

After hearing from a handful of residents who have never paid city property taxes on their Lake Austin homes, Council voted unanimously on Thursday to repeal an ordinance that exempted about 400 such properties from city taxes.

Council also approved a resolution directing the city manager to look at ways the city might spend an anticipated $3 million in revenue from taxes on those homes to address issues related to homelessness, mental health and addiction, child care and early childhood education.

Council Member Jimmy Flannigan voted against that resolution, continuing his attempts to save the city money rather than commit to spending it. Mayor Steve Adler and Council Member Alison Alter pointed out that the direction to the city manager was not a commitment to spend money on any particular issue.

Most of those speaking protested that they’d had very little time to organize against a plan announced by Council members Greg Casar and Flannigan to repeal the 1986 ordinance that has shielded an estimated 400 properties – many of them mansions – from paying city taxes. The rationale behind the original ordinance was that those properties did not receive the same city services as the rest of the city.

Retiree Judy Harward explained that she and her husband live on benefits from Social Security and the Teacher Retirement System and said she was speaking on behalf of senior citizens. Harward said she and her husband pay about $18,000-$19,000 a year in taxes to Travis County, Austin Independent School District, the Travis County Healthcare District, Austin Community College and Travis County Emergency Services District No. 4. She estimated that adding city taxes would mean an increase of about $8,000-$9,000 annually to their tax burden.

The appraised value of the Harwards’ home and land is $1,987,000, according to records at the Travis Central Appraisal District. Like thousands of other Austinites, they have protested the appraised value.

Under the ordinance approved repealing the exemption, the Harwards will not pay any additional taxes this year, but will have to pay city taxes in 2021.

Like several of her neighbors, Diana Johnson complained that she and her neighbors do not receive the same city services as people in other parts of the city. They have no water and wastewater service and firefighters are greatly disadvantaged when fighting fires in their neighborhood because there are no hydrants. She said her house burned down in 1985, and more recently, she watched fire demolish the house next door while Austin firefighters stood on her roof protecting her home.

Johnson also said it was “egregious” that she and her neighbors were only informed of the proposed change two weeks ago. “Don’t tax me out of my home,” she said.

Greg Meszaros, director of Austin Water, responded to questions from Council about how Austinites pay for water service. None of those services come from city taxes, he said, but all homeowners pay for their own services.

Several Council members pointed out that the 1986 ordinance should never have been approved as it is in conflict with the Texas Constitution.

Council was not swayed by the homeowners’ arguments.

Most if not all of those speaking live in District 10 and are represented by Alison Alter. She noted that dozens of people came to a meeting she held Monday about the issue and that her office has fielded hundreds of phone calls from constituents worried about increased taxes.

Alter asked Police Chief Brian Manley and Rob Vires, chief of staff for the Fire Department, whether services to the area would improve with the payment of taxes. Both of them basically told her there would be no change. She also noted that taxpayers in other parts of the city also have legitimate complaints about slow service. However, that did not impact her decision to vote for repealing the 1986 ordinance.

Some Lake Austin-area residents own properties that are partially within full purpose jurisdiction of the city and partially outside that area. As Alter explained, they should only be paying city taxes on the full purpose part of their properties. They should also be paying taxes to the Emergency Services District on the property that is outside of city jurisdiction, but they should not be taxed twice for services on the same property. Alter noted that each property is different and that figuring out which entity should be collecting how much in taxes could be quite a challenge.

Alter asked City Manager Spencer Cronk to work with her office on upgrading public safety services in the area and helping residents make sure that they are not doubly taxed for those services. She noted that a new fire station is coming to the Davenport Ranch area and would be serving a lot of the affected homes.

Although the issue was a difficult one for her, Alter said, “At the end of the day I took an oath to defend the Constitution. … We are legally obligated to repeal this ordinance. I know many of you have raised concerns about how it can be legal for the city to tax your properties without providing certain services. The unfortunate reality is that many parts of our city pay property taxes without getting as many services or services at the level that they should and they also experience longer response times for public safety issues.

“Most of the neighbors with whom I’ve spoken have legitimate concerns about safety and I think the rest of us ought to be worried about the implications for wildfire more generally,” she continued.

She said she knew that many of those who came Council were unhappy with the situation, but she urged them to continue to work with her office.

Mayor Adler, like several of his colleagues, admitted that the issue is a difficult one. He explained that he first started thinking about the issue a year ago when a taxpayer sued the city claiming that they were not receiving equal services as their neighbors who were not paying taxes. ” I think it would be imprudent for our city to adopt a policy that says you don’t have to pay taxes unless you’re receiving all the services the city funds. There are other parts of the city that don’t receive all the services that the city provides.”

Council Member Natasha Harper-Madison said members of her community were denied city services for years but still had to pay property taxes. Casar pointed out that there are people in his district who do not have easy access to city parks, a long-standing issue in District 4. He said the point of the issue was not to demonize anyone, which has been a byproduct of the media coverage of how expensive the affected houses are.

According to Philip Jankowski, the Austin American-Statesman reporter who broke the story about the homeowners not paying city taxes, the average property value for Lake Austin homes is about $2.1 million, with some going as high as $13.5 million.

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Key Players & Topics In This Article

Austin City Council: The Austin City Council is the body with legislative purview over the City of Austin. It offers policy direction, while the office of the City Manager implements administrative actions based on those policies. Until 2012, the body contained seven members, including the city's Mayor, all elected at-large. In 2012, City of Austin residents voted to change that system and now 10 members of the Council are elected based on geographic districts. The Mayor continues to be elected at-large.

Lake Austin: Lake Austin is a water reservoir on the Colorado River, and the source of Austin's drinking water. It was created by the 1939 construction of the Tom Miller Dam and is managed by the Lower Colorado River Authority.

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